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Workers pay more for health care - survey
=========================================

More U.S. employers are adopting 'higher deductible' consumer-directed
plans in an effort to control rising health care costs.
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Parija B. Kavilanz, CNNMoney.com senior writerMarch 16, 2009: 12:54 PM
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NEW YORK (CNNMoney.com) -- As health care costs continue to rise, more
companies are adopting consumer- directed health plans that would
lower their own costs but potentially raise costs for employees.

More than 51% of U.S. employers now offer a consumer-directed health
plan (CDHP), up from 47% last year, according to the latest survey of
489 large U.S. employers from Watson Wyatt, a consulting firm that
specializes in employee benefits.

And another 8% of employers are expected to adopt a CDHP by 2010, the
report said.

0:00 /2:40Health care 2.0

"Employers aren't offering these plans because employees want them,
but because companies are clearly trying to lower their own benefits
costs," said Kathleen Stoll, director of health policy with consumer
advocacy group Families USA.

Consumer-directed health plans (CDHPs) are typically lower premium but
higher deductible health plans. They feature a kind of savings or
spending account that helps employees pay their out-of-pocket expenses
for covered services, or services that are not covered by a
traditional plan.

Proponents of CDHPs say these plans promote more cost-conscious health
care choices.

Also, these plans give consumers and employers tax-free savings
vehicles through either a health savings account (HSA) or a health
reimbursement arrangement (HRA).

But critics say CDHPs shift more of the financial responsibility for
the costs of medical care to employees.

Although premiums for consumer-directed plans are generally lower than
for other types of plans, the deductibles are high - the average
general annual deductible for single coverage is $2,010 for
HSA-qualified plans and $1,552 for HRAs, according to non-profit group
Kaiser Family Foundation.

"No one prefers a higher deductible plan," said Stoll. "Many American
workers are already on edge and they can't pay more. They just don't
have the extra income in the family budget."

A separate Kaiser Family Foundation survey on CDHPs found that
participants were twice as likely as others with more traditional
employer-sponsored insurance to ignore medical care they needed
because of the cost, choosing either to delay or skip treatment
altogether.

Regarding the tax savings benefit of CDHPs, Stoll said this aspect of
the plans works more effectively for wealthier American workers,
"those in very high tax brackets" who can afford to pay the high
deductibles and save on the small premiums.

"Over the last few years employers have been shifting more of the
cost coverage to employees," said Paul Fronstin, senior research
associate with Employee Benefit Research Institute (EBRI), a
non-profit policy research group.

Not only are deductibles and co-payments increasing, "last year we
found that $1,000 deductible was now common for an average small group
of 200 or fewer employees," he said.

Still, the "devil's in the details," said Fronstin. "Some companies
will use these plans purely to shift costs to employees."

At the same time, Fronstin said there is a legitimate argument to be
made that CDHPs can "help change the way people use the health care
system."

For Fronstein, the biggest challenge employers face is the lack of
understanding about CDHPs. "They've only been around since 2004."

"Just because more large employers are offering them doesn't mean
people are using these plans," he said, adding that enrollments are
still low for HSAs because people find them confusing to understand.

Stoll of Families USA had a different viewpoint.

"I don't think employers want to withdraw health coverage to save on
costs, but they are dealing with higher deductibles and co-payments,
particularly in the current economic environment, she said.

"More costs are shifting to employees who can't afford them. This
trend should be a lesson for health care reform," she added. To top of page

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